TORONTO, ONTARIO--(Marketwired - Feb. 3, 2017) -
Editors Note: There is a photo associated with this press release.
Ascendant Resources Inc. (TSX VENTURE:ASND) ("Ascendant" or the "Company")
is pleased to provide a progress report further to the operational update issued January 17th, 2017. Following the
change of ownership on December 20, 2016 the Ascendant management team has had the opportunity to undertake a more detailed
review of current mine operations with the mine staff and its technical consultants in order to construct a plan to optimize
operations at the El Mochito Mine with the goal of delivering sustainable profitability. The Company has also initiated a
detailed review of the exploration opportunities at El Mochito to enhance ore grade and increase tonnage. Management continues to
further examine opportunities to optimize operations and drive exploration success.
The Company is currently focused on immediate opportunities to increase mine production and underground development, improve
maintenance programs, review equipment status and focus on an overall reduction of operating costs. Ascendant has identified
several immediate optimization activities to be implemented that should have a material impact on cash flows in the near-term.
These initiatives are intended to improve current production which was hindered by short-term mine objectives and significantly
lower investment in underground development and backfilling of open stopes during the second half of 2016. These low levels of
reinvestment have resulted in a limited underground development program that has restricted access to higher grade chimney ore.
The lack of adequate backfilling and ground stability work has also necessitated more underground rehabilitation work than had
been expected to ensure a safe working environment.
The issues outlined above combined with suboptimal equipment availability (due to reduced spare parts availability) and poor
mine logistics have impacted recent production. During the fourth quarter of 2016, ore throughput averaged 1,468 tpd. Production
in the fourth quarter was impacted by a slow restart following a mine fatality in August which saw the temporary shutdown of the
mine in September to review safety practices. For January, production averaged approximately 1,530 tpd when operating. Current
operating costs, which have a high degree of fixed costs and are significantly impacted by production volume, are approximately
$75/t before capital expenditures. Many of the issues identified during the due diligence process were identified as
opportunities that could be overcome under the new leadership of the Ascendant management team, however, the initial lower ore
throughput means management is starting below our initial expected baseline. Despite this initial setback, and based upon the
review to date, management remain highly confident that the mine production rates in excess of 2,200 tpd combined with lower
units costs to the mid or low $50/t range can be achieved over the next 18 months.
President and CEO, Chris Buncic commented, "The past 45 days since taking control of the operations at El Mochito on
December 20th, 2016 have been an extremely busy and productive period for the Company. As discussed in today's press release,
under-investment by the previous owner and poor production rates leading up to the Acquisition have set our timeline back several
months but we are confident that we have seen the inflection point and the outlook going forward remains strong." He
continued, "Regarding operations, our mining team and technical consultants have created an achievable plan to ramp-up
production to 2,000 tpd and potentially higher over the next 12 -18 months. At the same time, new exploration and development
programs should enable us to access higher grade "chimney" style ore in conjunction with this higher throughput. We remain
extremely pleased with the timely nature of the acquisition given the continued strength in the zinc market and we look forward
to providing regular market updates as we move forward."
Initial Optimization plans
While Ascendant continues its review, following the Company's third week of technical review on site, numerous opportunities
have been identified and are being implemented to increase throughput and reduce costs. The initial focus targets the following
areas:
- Underground Safety - We remain committed to improving the overall safety standards at El Mochito. Ascendant has continued
to instill an improved safety culture at the mine and addressed deficiencies in various safety areas such as adding fire
extinguishers, refuge areas and emergency signage underground.
- Reduce Unproductive Time per shift - Currently it is estimated that up to a third of every shift is lost in unproductive
time due to logistics, poor planning and communications. Ascendant management believes an improved focus on scheduling, more
detailed supervision and accountability should reduce this lost time to more acceptable levels, adding additional productive
hours per day.
- Horizontal Development - During the latter part of 2016 horizontal development was reduced to very low levels. In order to
ensure sufficient working areas and to gain access to new higher grade zones management are aiming to accelerate underground
development in excess of 1,000 ft per month. Increased underground flexibility should support a more stable operating
environment moving forward.
- Haulage Logistics - Maximizing ore tonnes per truck trip and increasing the number of trips per shift can be achieved,
including appropriate staffing of vehicles to maximize productive hours per day. Various programs are being implemented
including driver priority at shift change, better truck loading and better underground planning to ensure over utilization of
the fleet is maximized. For every additional truck cycle per shift management estimates that this could add approximately 48tpd
per truck. As such assuming 7 trucks are available this could add more than 350 tpd of combined ore and waste movement.
- Fleet Availability and Utilization - Continued improvement in the maintenance programs remains a priority given the age of
much of the fleet. A lack of preventative maintenance in the past has resulted in lower availability which Ascendant is
currently addressing. Once availability is enhanced, the focus will shift to improving fleet utilization. We note fleet
availability rates have already begun to show improvement and are now closer to 70% as compared to 60% in the second half of
2016 given more focus on preventative as opposed to reactive maintenance. That said, overall utilization rates remain low at
closer to 55% due planning and communication issues. As part of this process we plan to undertake a review of the fleet to
determine the optimal size which may lead to fleet renewal to support sustainable long-term production targets.
- General Operating Costs - Ascendant is placing renewed focus on reducing costs related to production and to ancillary
activities with an initial target of a 10% reduction. Ascendant is in the process of commencing several initiatives to reduce
overall input costs, external service costs and extraneous expenses.
Union Transition and the CBA
During the process of Ascendant's negotiations for the acquisition of the El Mochito Mine with the previous owners, the
collective bargaining agreement ("CBA") between the Company's Honduran subsidiary American Pacific Honduras SA de CV and the
applicable workers' union expired at the end of September 2016. It was agreed between the previous owners and the union to defer
negotiations on a new CBA until the completion of Ascendant's acquisition. During this period, dissatisfaction amongst workers
led to a change in union leadership, which has culminated in a work stoppage at the El Mochito Mine that commenced late last
week. Management is currently in discussions with the new union representatives to restart operations. The expectation is that
once the workers have returned to work and full operations have resumed, management will immediately progress to negotiate a new
CBA. In the meantime, mining and milling operations have been put on hold but general maintenance and administrative activities
continue at the mine.
Mr. Buncic continued, "While we are disappointed with the work stoppage, this temporary delay ultimately gives us the
opportunity to bring forward the negotiation of a new collective bargaining agreement, which we knew from the outset would be
required, and allows us to start off on the right foot as we deliver on our strategy. We are optimistic these negotiations will
be concluded in the near term and will create a positive long term compensation structure for our employees that will incentivize
them in line with our corporate objectives."
Exploration Review Update
Over the past several weeks, the Company has continued to review the various exploration targets to better define short and
long-term opportunities and goals. To date the exploration at El Mochito has created numerous targets for future evaluation which
management believe could add significant high grade resources and potentially extend the mine life of EL Mochito upon future
definition. Figure 1 outlines the various near mine target areas, classified in terms of short, medium and long-term targets. The
rate at which the Company may define such targets is limited to available cash flow. Please refer to the Company's NI 43-101
technical report on the El Mochito Mine available at www.SEDAR.com (the "El
Mochito Technical Report").
The El Mochito exploration teams estimate that, based upon historical work, there is the potential to add in the order of
2.0MM tonnes of additional resources from short and medium term targets, though there is insufficient exploration at this time to
define the targets as a resource and it is uncertain if further exploration will result in any part of the target becoming a
resource or mineral reserve. Of importance is that the bulk of these additional untested resources are targets of extensions of
known chimney zones where ore grades are typically materially higher than that of current production. As the mine focuses on
blending chimney ore with the larger mantos regions, defining additional chimney material should enable a higher percentage of
higher grade chimney material in the blend. This provides the potential to see a material long-term boost in head grade to the
mill provided these programs are successful.
Short-term targets are defined as those where drilling stations are essentially in place or could quickly be installed without
the need for underground development. Key targets include the Victoria zone (current ore grades for known resources in the mantos
in this region are 5.2% zinc, 1.5% lead and 24 g/t silver and 4.3% zinc, 2.6% lead and 44 g/t silver in the chimney's in the
region) and the smaller Palmer Dyke targets (current resources in the region grade over 6.0% zinc, 4.8% lead and 79 g/t silver)
per the El Mochito Technical Report.
Medium-term targets require a degree of underground development to access these regions to undertake drilling and future
production development. While there are several such targets, a key undertaking would be the development along the Imperial trend
to open up drilling stations for the upward extension of the McKenney, Barbasco, Imperial and Esperanza chimney zones. Definition
of these zones is currently restricted by the inability of the drills to reach these areas from current drilling platforms. Once
again, ore resources in these regions which has either been mined or are currently in the mine plan suggest the potential to
define higher than average ore grade material. It is estimated that a total of 4,500 ft of development would be required to be
able to fully establish the drilling platforms for the upper chimney extensions of these zones. This development would also open
up the higher regions of the mine area to new exploration which has been constrained historically by the lack of development to
access drilling in this area. Additional medium-term targets are the further extension of known resources where drilling to date
has been restricted due to lack of access such as the Santa Elena zone, Nina Blanco and the Deep Mantos targets.
Longer-term targets are generally more speculative in nature and further away from current workings, yet most have some
historical drilling to support further exploration efforts. Management believes the potential exists to add material tonnage to
the overall resource if successful. The bulk of these targets are focused on the extension of structural zones which historically
have controlled the ore deposit. A primary example would be along the Porvenir trend where historical drilling about 3,000 ft
form current working intersected large widths of ore grade material that has yet to be fully defined. Further the potential for
mineralization to exist between current workings and the target area is viewed as high. For example, historical drilling in the
area produced hole 14-PS-01 which intersected 30.7ft @ 9.9% zinc, 2.0% lead and 32 g/t silver. Hole 14-PS-02 intersected 27.8ft @
5.9% zinc, 3.8% lead and 35 g/t silver. In addition to near mine longer term targets there are numerous regional targets to be
explored starting from grass roots exploration to better understand known outcropping in the region.
This press release was prepared under the supervision of Mr. Robert Campbell, M.Sc., P.Geo., a member of the board of
directors of Ascendant and a "qualified person" for the purposes of NI 43-101.
About Ascendant Resources
Ascendant Resources Inc. (formerly known as Morumbi Resources Inc.) is a mining issuer focused on its flagship operating
asset, the producing El Mochito zinc, silver and lead mine in west-central Honduras in which the Company has a 100% interest. El
Mochito has been in almost continuous production since 1948. More broadly, the Company evaluates producing and advanced
development stage mineral resource acquisition opportunities in North, South and Central America, on an ongoing basis. The
Company's common shares are listed on the TSX Venture Exchange under the symbol "ASND". For more information, visit us at www.ascendantresources.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Note Regarding Forward-Looking Information
This press release includes certain "forward-looking information" within the meaning of applicable Canadian securities
legislation.
Forward-looking information is based on reasonable assumptions that have been made by Ascendant as at the date of such
information and is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level
of activity, performance or achievements of Ascendant to be materially different from those expressed or implied by such
forward-looking information, including but not limited to: the impact of general business and economic conditions; that the
automatic exercise of the Subscription Receipts and Compensation Warrants will take place as expected; that any accretive
acquisitions of or pertaining to mineral resource assets in North, South or Central America (or otherwise) will be completed;
problems inherent to the marketability of base and precious metals; industry conditions, including fluctuations in the price of
base and precious metals, fluctuations in interest rates; government entities interpreting existing tax legislation or enacting
new tax legislation in a way which adversely affects Ascendant; stock market volatility; competition; risk factors disclosed in
the Prospectus, in Ascendant's most recent Annual Information Form and Management's Discussion and Analysis available
electronically on SEDAR; and such other factors described or referred to elsewhere herein, including unanticipated and/or unusual
events. Many such factors are beyond Ascendant's ability to control or predict.
Although Ascendant has attempted to identify important factors that could cause actual outcomes to differ materially, there may
be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that
forward-looking information will prove to be accurate as actual outcomes and future events could differ materially from those
reliant on forward-looking information.
All of the forward-looking information given in this press release is qualified by these cautionary statements and readers
are cautioned not to put undue reliance on forward-looking information due to its inherent uncertainty. Ascendant disclaims any
intent or obligation to update any forward-looking information, whether as a result of new information, future events or results
or otherwise, except as required by law. This forward-looking information should not be relied upon as representing the Company's
views as of any date subsequent to the date of this press release.
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